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Test your basic knowledge |
AP Microeconomics
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Subjects
:
economics
,
ap
Instructions:
Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can
study here
.
Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.
This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Characterized by many small price-taking firms producing a standardized product in an industry in which there are no barriers to entry or exit
Absolute Advantage
Perfect competition
Economies of Scale
Oligopoly
2. Pm > MR = MC - which is not allocatively efficient and dead weight loss exists. Pm > ATC - which is not productively efficient. Profit > 0 so consumer surplus is transferred to the monopolist as profit
Market Equilibrium
Monopoly long-run equilibrium
Opportunity Cost
Perfectly inelastic
3. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand
Normal Goods
Determinants of Demand
Non-collusive oligopoly
Relative Prices
4. The rational decision maker chooses an action if MB = MC
Marginal Analysis
Average Fixed Cost (AFC)
Economic Growth
Total variable costs (TVC)
5. The proportion of the tax paid by the consumers in the form of a higher price for the taxed good is greater if demand for the good is inelastic and supply is elastic
Average Fixed Cost (AFC)
Incidence of Tax
Constant Returns to Scale
Necessity
6. The downward part of the LRAC curve where LRAC falls as plan size increases. This is the result of specialization - lower cost of inputs - or other efficiencies of larger scale.
Market Economy (Capitalism)
Determinants of Demand
Consumer surplus
Economies of Scale
7. Models where firms agree to mutually improve their situation
Average Total Cost (ATC)
Monopoly
Collusive oligopoly
Law of Increasing Costs
8. Additional costs to society not captured by the market supply curve from the production of a good - result in a price that is too low and a market quantity that is too high. Resources are overallocated to the production of this good
Spillover costs
Marginal Benefit (MB)
Incidence of Tax
Long Run
9. Total product divided by labor employed. APL = TPL/L
Relative Prices
Average Product of Labor (APL)
Law of Supply
Diseconomies of Scale
10. TR = P * Qd
Law of Supply
Derived Demand
Price Ceiling
Total Revenue
11. The upward part of the LRAC curve where LRAC rises as plant size increases. This is usually the result of the increased difficulty of managing larger firms - which results in lost efficiency and rising per unit costs.
Profit Maximizing Resource Employment
Complementary Goods
Diseconomies of Scale
Utility Maximizing Rule
12. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit
Long Run
Oligopoly
Luxury
Monopoly
13. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.
Market Economy (Capitalism)
Total Fixed Costs (TFC)
Marginal Benefit (MB)
Perfectly competitive long-run equilibrium
14. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product
Absolute Advantage
Marginal Product of Labor (MPL)
Shutdown Point
Excise Tax
15. The combination of labor and capital that minimizes total costs for a given production rate. Hire L and K so that MPL / PL = MPK / PK or MPL/MPK = PL/PK
Consumer surplus
Utility Maximizing Rule
Market Equilibrium
Least-Cost Rule
16. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.
Economic Profit
Explicit costs
Public goods
Surplus
17. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital
Price Ceiling
Price elasticity
Fixed inputs
Relative Prices
18. The additional benefit received from the consumption of the next unit of a good or service
Profit Maximizing Resource Employment
Marginal Cost (MC)
Marginal Benefit (MB)
Price Elasticity of Supply
19. The total quantity - or total output of a good produced at each quantity of labor employed
Negative externality
Price inelastic demand
Total Product of Labor (TPL)
Luxury
20. Entry of new firms shifts the cost curves for all firms downward
Fixed inputs
Decreasing Cost industry
Marginal Revenue Product (MRP)
Total Fixed Costs (TFC)
21. Costs of inputs - technology and productivity - taxes/subsidies - producer speculation - price of other goods that could be produced - and number of sellers all influence supply
Marginal Product of Labor (MPL)
Market Equilibrium
Necessity
Determinants of Supply
22. Ed < 1
Monopolistic competition
Price inelastic demand
Marginal Benefit (MB)
Monopsonist
23. Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient
Law of Increasing Costs
Productive Efficiency
Average Product of Labor (APL)
Monopoly
24. Costs that change with the level of output. If output is zero - so are TVCs.
Marginal Analysis
Substitute Goods
Productive Efficiency
Total variable costs (TVC)
25. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic
Variable inputs
Total Revenue Test
Monopolistic competition long-run equilibrium
Perfectly elastic
26. Ex -y = (%dQd good X) / (%d Price Y). If Ex -y > 0 - goods X and Y are substitutes. If Ex -y < 0 - goods X and Y are complementary
Shortage
Cross-Price Elasticity of Demand
Average Variable Cost (AVC)
Normal Goods
27. Additional benefits to society not captured by the market demand curve from the production of a good - result in a price that is too high and a market quantity that is too low. Resources are underallocated to the production of this good
Shutdown Point
Excise Tax
Negative externality
Spillover benefits
28. The output where ATC is minimized and economic profit is zero
Price discrimination
Subsidy
Surplus
Break-even Point
29. 0 < Ei < 1
Allocative Efficiency
Comparative Advantage
Production function
Necessity
30. Es = (%dQs) / (%dPrice)
Substitution Effect
Price Elasticity of Supply
Production function
Subsidy
31. MUx / Px = MUy/Py or MUx/MUy = Px/Py
Total Fixed Costs (TFC)
Utility Maximizing Rule
Determinants of Labor Demand
Excess Capacity
32. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good
Break-even Point
Law of Demand
Long Run
Market Economy (Capitalism)
33. Indirect - non-purchased - or opportunity costs of resources provided by the entrepreneur
Surplus
Diseconomies of Scale
Implicit costs
Utility Maximizing Rule
34. ATC = TC/Q = AFC + AVC
Average Total Cost (ATC)
Marginal Analysis
Perfectly inelastic
Resources
35. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)
Income Effect
Constant Returns to Scale
Marginal Resource Cost (MRC)
Implicit costs
36. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment
Determinants of Demand
Excess Capacity
Perfect competition
Natural Monopoly
37. Entry (or exit) of firms does not shift the cost curves of firms in the industry
Economic Profit
Monopolistic competition
Constant cost industry
Least-Cost Rule
38. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good
Law of Supply
Negative externality
Increasing Cost Industry
Consumer surplus
39. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.
Economic Growth
Price elastic demand
Least-Cost Rule
Long Run
40. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity
Decreasing Cost industry
Producer surplus
Marginal Productivity Theory
Price elastic demand
41. Measures the cost the firm incurs from using an additional unit of input. In a perfectly competitive labor market - MRC = Wage. In a monopsony labor market - the MRC > Wage
Marginal Resource Cost (MRC)
Total variable costs (TVC)
Price inelastic demand
Monopolistic competition long-run equilibrium
42. The practice of selling essentially the same good to different groups of consumers at different prices
Price discrimination
Absolute prices
Variable inputs
Surplus
43. The ability to set the price above the perfectly competitive level
Market power
Producer surplus
Private goods
Implicit costs
44. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good
Positive externality
Price elastic demand
Productive Efficiency
Surplus
45. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability
Spillover benefits
Marginal tax rate
Price floor
Resources
46. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power
Luxury
Substitution Effect
Monopoly
Cross-Price Elasticity of Demand
47. The difference between your willingness to pay and the price you actually pay. It is the area below the demand curve and above the price
Normal Profit
Perfect competition
Consumer surplus
Total Revenue
48. The most desirable alternative given up as the result of a decision
Opportunity Cost
Non-collusive oligopoly
Economies of Scale
Total Revenue
49. Production of the combination of goods and services that provides the most net benefit to society. The optimal quantity of a good is achieved when the MB = MC of the next unit and only occurs at one point on the PPF
Shortage
Allocative Efficiency
Private goods
Marginal Product of Labor (MPL)
50. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms
Profit Maximizing Rule
Shutdown Point
Determinants of Labor Demand
Demand for Labor